When deciding how to measure fair value of an asset or liability,there is sometimes a trade-off between ________.
A)understandability and comparability
B)faithful representation and neutrality
C)verifiability and neutrality
D)relevance and faithful representation

Question

Quizplus · Accepted Answer

When measuring fair value, there is often a trade-off between relevance and faithful representation. Relevance requires that the measurement reflects current market expectations about future cash flows, while faithful representation requires that the measurement be unbiased and free from error. Therefore, the best choice would be D as it correctly identifies this trade-off.

When Deciding How to Measure Fair Value of an Asset